State officials are pushing interlocal service agreements as a way for governments to save money. But many local towns already enjoy the benefits.
By: Rebecca Weltmann
Part I: The big idea
For the past few decades, municipalities throughout the state of New Jersey have engaged in interlocal service agreements with neighboring communities and counties. Recently, the state has further encouraged such agreements as a piece of the puzzle to help solve the state’s property-tax crisis.
For governing bodies towns, schools, counties to enter into an interlocal service agreement, willing partners must agree on both the service and terms under which it is to be provided. Often, a feasibility study is done to determine how a service could be shared. According to state Department of Community Affairs spokesperson Chris Donnelly, a contract then specifies the details, terms and conditions. The agreement is then authorized by resolution by each participating body.
"Sharing services is a way to stretch budget dollars and a vital component of Gov. Corzine’s property-tax reform," Mr. Donnelly said. "Two or more local units can do things more economically or more efficiently than a single community."
New Jersey and its neighbors use a number of agreements, such as the NY-NJ Port Authority and the Delaware River Port Authority, to address joint services or issues that affect the region, he added. Mainly, though, interlocal service agreements occur between neighboring town governments, a municipality and its school district or a school district and a neighboring school district.
As a method of further encouraging more towns to look into sharing services, the state offers grants for interlocal shared-service agreements. The DCA administers the SHaring Available Resources Efficiently (SHARE) program, which provides feasibility study grants to assist with the one-time start up or transitional costs in establishing a new shared-service program.
Three years ago, for example, Plumsted Township received a $39,000 grant to enter into a shared-service agreement with the school district for use of the information technologies department. Last summer, the DCA awarded Washington $100,000 in extraordinary aid because of township’s efforts in forming and maintaining over a dozen service agreements.
"Shared services can result in cost savings, though every service and every sharing situation is different," Mr. Donnelly said. "Some will bear immediate results, others may take longer to produce significant savings. Shared services are another tool available to local officials to help control costs and maintain services."
Part II: The local scene
The state of New Jersey has encouraged municipalities to embrace interlocal service agreements as a way to save money. Most local towns already have and those that have say they are pleased with the concept as well as the practice.
Allentown, for example, shares a number of services with its neighbors particularly Upper Freehold, with which it shares animal control and firefighters, and Washington, with which it now shares Public Works employees.
The Allentown Borough Council on April 17 approved a plan allowing Washington to supervise Public Works projects and personnel for $25,000. Previously, the borough clerk oversaw the department and benefited from the work of those charged with community service and inmates from the county sheriff’s office. Due to both the unreliability of workers and the resignation of Borough Clerk Lorene Wright last summer, Mayor Stu Fierstein said, the council began looking into hiring a Public Works Department supervisor.
After a few weeks of being in the interlocal agreement for the Public Works supervisor, Mayor Fierstein said he is already pleased with the results of how much more efficiently the projects go with a supervisor.
"It enables us to accomplish all our goals and chores that Public Works needs to do throughout the town," Mayor Fierstein said. "It provides us with capable supervision from which we had previously not had on a continuing basis. It also provides us with the man-power we need to support the current crew (of two people)."
The agreement, which took effect May 21, also provides for equipment the borough does not have, such as a rear-end loader for trash removal. Previously, trash and brush were removed with dump trucks, which made several trips. Having rear-end loaders, the mayor said, makes trash and brush removal that much easier and efficient. Removal was done by the Public Works, which was not an extra cost to the borough. Now, though Public Works still takes care of the brush removal, the interlocal agreement allows for the use of better equipment to cut down on the number of trips it takes for removal.
Washington also provides vehicle maintenance for Allentown. That service, Mayor Fierstein said, is projected to save approximately $10,000 annually.
In the last 10 years, Washington has been involved not only with Allentown, but 14 other municipalities.
"Interlocal agreements have two advantages," said Washington Township Administrator Mary Caffrey. One is saving money by sharing personnel."
The other, she said, is providing a level of service that would otherwise be very difficult to maintain.
"Sometimes it just doesn’t make sense to hire your own full-time employees," she added.
While Washington Township is generally on the giving end of interlocal service agreements, it does see revenue as a result of those agreements. In fact, the township expects its EMS services agreement with Hightstown to generate $35,000 and its agreement with Mercer County Soil Authority for automotive mechanical services $4,750. Ms. Caffrey added that if the actual billing comes in higher than the fee, the extra revenue goes into the surplus for the 2008 budget.
"When you’re looking for ways to bring in new revenues we have the position of being a larger town with smaller communities around us," she said. "We’re big enough to provide those services and they’re in need of someone to provide those services."
Ms. Caffrey also said that interlocal service agreements are a stepping stone to solving the state’s problems with rising property taxes.
Millstone Township Administrator James Pickering agrees, saying that while interlocal service agreements are not the sole answer to the property tax problem, they are certainly an option towns should explore.
"It obviously depends on the tax base," he said, "but every town, regardless of tax base or rateables, should look into the options of being either a provider or a recipient of interlocals."
Roosevelt holds its court sessions in Millstone, while Millstone uses Upper Freehold for animal control services. Millstone also has an interlocal agreement with its school system for cleaning and maintenance services.
"Having these interlocal services has worked out exemplary," Mr. Pickering said. "It’s not always easy to cut down costs, but we’ve been very successful. We don’t have to worry too much, because it’s the other township’s responsibility to provide the service and pay for the salary and benefits."
In Plumsted, Mayor Ron Dancer said various interlocal agreements have saved the township millions of dollars. Since the 1980s, the township has relied on an agreement with Ocean County and the arrangement has provided the township with significant cost savings, the mayor said.
"Our taxpayers pay almost four times less for the municipal portion of their property taxes than the county average of $1,327," he said. "That would not be possible if we had to have our own public works department."
He added that through the arrangement, the county only bills the township when the township uses the equipment and labor. If there is a month when Plumsted does not use the Public Works equipment or county employees, they are not billed for that month.
Plumsted also holds service agreements with Upper Freehold for animal control and Jackson for electricity and maintenance costs for traffic lights on their borders.
It also shares services with the County Board of Health Services office, since Plumsted has no board of its own, and with the schools for information technologies and two athletic fields.
Upper Freehold’s signature service is animal control. This year alone, it has 11 such contracts, expected to generate more than $37,000 for the municipal coffers. The number of contracts stem from a three-year-old state law requiring municipalities to provide animal control personnel with climate-control vehicles. Under the law, many municipalities would have had to purchase new vehicles. But Upper Freehold already had such a truck and, as a result many townships have seen savings since they did not have to purchase the vehicle.
At the same time, Upper Freehold adds revenue to its budget. Chief Financial Officer Diane Kelly said, however, that the biggest benefits are for the smaller towns.
"For small towns, it’s unrealistic for each town to have to buy one of the climate control vehicles," she said. "It is a really good idea from a practical point of view for towns to get together in a situation like this where you have an expensive operation and you have a lot of little towns that can’t provide that on their own."

